Wednesday, October 15, 2008

Dreams of Beating the Credit Crunch

It may be a sweeping generalisation to say that most people dream of financial independence without the need to be a wage slave, but certainly my experience is that many of my friends and acquaintances are seeking that elusive windfall. Whether it's a lottery win, coming up on the football pools or benefiting from the bequest of a distant and long-forgotten relative, a lot of idle thought goes into what we'd do with the money.

But once you've got past the nice house, the flash car and the luxury holidays - and even if you share the money out with family and friends, few of us look at the long-term implications of living a moneyed lifestyle.

A few weeks ago (as I write this) the EuroMillions lottery jackpot nudged £100 million following a series of rollover weeks. That's almost enough to buy a bank these days, which points to another problem - where is the safest place for your money?

Even the most profligate spender would have a problem frittering such a vast amount away - unless they are employed by HM Government - but how do you protect your millions from being used up?

There's no point putting it in the bank, as they're all going bust at the moment, so your money would most likely end up paying for the severance packages of the board of directors. Property used to be a safe place to invest, but in the current climate you stand a better than even chance of losing a lot of money. Classic cars aren't worth what they used to be and the prices are volatile; the same goes for art and pretty much anything else collectable. And as for shares, the FTSE and Dow Jones are in the news every day as some minor panic wipes billions of the value of major companies.

The two places that people are being advised to invest in are gold, and National Savings. The Post Office account was once the choice of many savers and it appears now that its day has come again, though given the losses sustained by the organisation in recent years, and the fact that there are no branches left outside large towns, it may not be as safe or convenient as you need. As for buying gold, I would always worry that someone with a cunning plan and access to the sewers that run so conveniently directly under the vault would have-it-away with my stash, and that's ignoring the fact that the vault storing my gold would most likely be in a bank, bringing us back to my earlier objection.

Then, there's the envy of others to consider. Many of us are familiar with the fact that there is a sub-strata of society that has no regard for the well-being or the property of others and will do everything in their power to relieve people of their money and possessions, including the threat (and execution) of violence against the person. Just how big a target would the owners of £100 million be? To what lengths would criminals go in order to steal valuables from them? How much would effective security cost, and would it seem like living in a prison of your own making, albeit a luxurious one?

So, what have we learned? No matter how much money you have, there's always a reason to worry that you don't have enough. Does that mean riches can't make you happy? Maybe, but at least you'll be comfortably miserable.